Multiple Choice
The convergence to a steady-state capital-labor ratio k* is ensured by the fact that if k is at a level
A) lower than k*, saving will exceed the investment required to maintain a constant k, causing k to rise
B) lower than k*, investment will exceed saving, leading to an increase in the capital stock
C) lower than k*, saving will exceed the investment required to maintain a constant k, causing output per capita to decline
D) higher than k*, the rate of depreciation will be higher than the savings rate, causing k to decrease
E) higher than k*, output per capita will continue to increase until a new steady-state equilibrium is reached
Correct Answer:
Verified
Correct Answer:
Verified
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